CURBING CORRUPTION IN PUBLIC PROCUREMENT PROCESS IN NIGERIA

CURBING CORRUPTION IN PUBLIC PROCUREMENT PROCESS IN NIGERIA

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ABSTRACT

This study examines the procurement process in Nigeria with a view to assessing the procurement act, as well as investigating the effects of corruption in public procurement on the masses and practical suggested ways of curbing corruption in our procurement process. The study also seeks to assess different policies and regulation earlier adopted and used to curb corruption in the system.

A broad review of literature was carried out on procurement act, the possible ways of achieving proper implementation of the act and other possible means of curbing corruption in Nigeria Public Procurement.

Data were collected with the aid of well-structured questionnaires administered on researchers/construction professionals like the Architects, Quantity Surveyors, Builders, Engineers, Estate Surveyors and other professionals like Accountants, Financial Managers, Bankers, Lawyers and journalists in government offices, banks, construction companies, media houses, research institutes and consulting firms in Enugu, Anambra, Ebonyi, Imo and Abia states of Eastern Nigeria. The data generated were further analyzed using descriptive statistical tools such as percentages, mean averages, frequencies and relative importance index ranking as well as comparison of results from participants groups respectively.

In conclusion, the results and interpretation obtained formed the basis for the conclusion drawn and recommendation given.

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Curbing Corruption in Public Procurement Process in Nigeria

2006346002F

CHAPTER ONE

1.0                                                               INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Construction Contracts are no more awarded because of the need of the society but motivated by greed and shameful intention to perpetrate fraud.

We know that fraud and corruption are international problems. They happen daily all over the world and it is not peculiar to Nigeria. In 2001 the United Kingdom government (National Audit Office) found that not less than 10% of the Euro 65 billion spent in the construction industry annually is lost to fraud.

In Nigeria fraud and corruption have reached epidemic state and Construction contracts carry a lion share of it. While the proceeds of corruption in developed nations remains in their countries those of Nigeria are taken out of the economic activities of the Nation and deposited in foreign accounts thereby dealing a ‘double blow – double tragedy’ on the country. Why are construction contracts so prone to fraud and corruption?

Spirited efforts are being made from different quarters to ensure that Nigeria is purged of corruption. In a bid to rid the country of corruption, stringent measures, laws and agencies have been set up to ensure that the system is sanitized. This gave rise to the Public Procurement Act, which was signed into law by President Umaru Musa Yar’Adua in 2007.

The Act became imperative because public procurement is one of the biggest sources of government expenditure, and is easily prone to abuse and accompanying corruption, as past experience has shown. The procurement Act 2007 is to provide the legal and institutional framework for the enthronement of transparency, accountability, value for money and efficiency in the procurement of works, goods and services in Nigeria.

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Curbing Corruption in Public Procurement Process in Nigeria

2006346002F

The overall impact of public procurement in governance, government perception and national development cannot be overemphasized, because if mishandled, it can impact negatively on the lives of ordinary Nigerians. On the other hand, if it is properly spent, the results would be long lasting as it would tinkle down to positively affect the welfare state of all Nigerians, especially at the grassroots.

Construction is an easy target because of the ways contracts are administered by Governments. It is no secret that road construction costs more to build in Nigeria than any other African country.

The point of call is the process involved in the contract award, procurement and the contract administration. In all these, no element of cost control is observed nor due process followed. It is this anomaly that made the former Minister for works Senator Ogunlewe to cry out during the public hearing on the Procurement bill. He said ‘“We are talking of Due Process, shouting Due Process. What is Due Process? In the Federal Ministry of Works where I preside as the Minister, I don’t believe there is anything that is Due Process. How can there be Due Process when the Engineer designs the roads, estimates the costs of the roads, selects the contractor, constructs the roads, supervises the construction, recommends payment for works done, approves the payment, certifies the quality and quantity of work! All these by one person! Haba! This cannot be Due Process. Not until roles are assigned to relevant professionals like the Quantity Surveyors, Architects, and Builders and so on to be in charge of cost control and management of public buildings, roads and highways, and the procurement of the necessary goods and materials in their field can there be any Due Process in Nigeria construction industry. Fraud in Construction contracts revolves around three major issues; namely:-

1.    Payment methods

2.    Quantity verification

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Curbing Corruption in Public Procurement Process in Nigeria

2006346002F

3. Quality specification and execution

It is only on construction contracts that businesses are set up and funded for the proprietors through advance and mobilization payments. Without any track record, a contractor can be given more than 70% of the contract sum even before he is shown the site just because he has procured an Advance Payment or Performance Bond that is more than the share capital of the issuing company and for which the receiving administrator has no respect or intention of enforcing.

The identified five major weaknesses in the existing procurement systems in Nigeria namely:

That Nigeria lacks a modern law on Public Procurement and permanent oversight body to provide guidance and monitor purchasing entities.

i)     that the Finance (Control and Management) Act, 1958, together with the Financial Regulations which set basic rules for managing public expenditure have gaps, deficiencies and faulty implementation of existing regulations on procurement (e.g. lack of permanent arrangements for control and surveillance) which create opportunities for bribery and corruption;

ii)   that due to inflation and lack of regular adjustments on the thresholds of the approving limits of the Tender Boards, their authorization were constantly being eroded resulting in abuses, prominent among which is splitting of contracts;

iii)  That there was proliferation of tender boards which were perceived by the private sector as sources of delays and non transparency. In addition, these tender boards appeared to have limited mandates with powers to decide contracts de facto resting with the Permanent Secretary and the Minister/ Commissioner;

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Curbing Corruption in Public Procurement Process in Nigeria

2006346002F

iv) that Customs systems and procedures were cumbersome and major causes of delay in clearing goods, and hence a source of corruption; and

v)   That Procurement is often carried out by staff that substantially lacks

relevant training.

Just as rightly put by R.F Kennedy that ‘because we cannot see clearly the end of the road, that is no reason for not setting out on the essential journey. On the contrary, great change dominates the world, and unless we move with change we will become its victims’. This assertion gives rise to the study which is carried out as a contribution to the curbing of corruption, a menace in Nigeria’s public procurement system in order not to be complete victim of it. The topic is widely discussed having Nigeria as a country in mind. The report provides an introduction to the international debate and experiences with procurement-related corruption, as well as recommendations on anticorruption measures to be implemented in procurement procedures.

There are several ways to explain this persistence of corruption. The time it takes to curb the problem may have been underestimated. There may also be a failure in the adjustment of anticorruption strategies to local conditions. And finally, the incentives to implement the necessary measures may be poor among politicians benefiting from the current system. However, in countries where corruption is a common problem it tends to disturb the market mechanisms and impede economic development. Corruption in public procurement makes the officials or the politicians in charge purchase goods or services from the best briber, instead of choosing the best price-quality combination. The result may be construction projects several times as costly as necessary, or the acquisition of goods not actually needed.

Also the efforts of public officials to get into position for obtaining bribes may represent a significant cost. Gifted youth often prefer jobs in the bureaucracy instead of more scientific professions, the allocation of public funds may be biased in favour of

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Curbing Corruption in Public Procurement Process in Nigeria

2006346002F

capital intensive sectors at the expense of health and education, and laws and regulations may be introduced just in order to obtain bribes. Even worse, public sector corruption has a pervasive impact on the poor since it reduces the funding available for social services and distorts public choices in favour of the wealthy and powerful, resulting in larger income differences between rich and poor. These are meant to be corrected with the amended and Act in place. It will help to fight corruption to a standstill, promote issue based politics, and prevent the subversion of the legal system with financial laws and regulations respected. This will affirms societal ethics that links the cardinal virtues of honesty, patience and hard work coupled with innovation and real contributions to the society and financial success.

1.3       STATEMENT OF THE RESEARCH PROBLEM

The mischief in the law and practice led to the enactment of the public procurement Act 2007 was the lack of value for money-economy, as efficient and effectiveness of public procurements were poor. Government is seen as the easiest source of wealth through inordinate contracting, and government was not accountable to Nigerians.


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